U.S., Japan Plan to Swap ‘Dual-Use’ Technologies : Trade: American military knowledge will be exchanged for civilian technology.

In a new U.S.-Japan cooperative effort, American military technology with potential commercial uses will be offered to Japanese firms in exchange for “dual-use” civilian technology applicable to weapons systems.

The U.S.-initiated “Technology for Technology” program, aimed at creating more advanced weapons at lower cost, has drawn interest from some of the Japanese corporations whose technology is sought by the Pentagon. But these firms generally remain unclear about prospects for profitable deals and wary of a possible backlash from the Japanese public, which still has a post-World War II aversion to military-related activities.

In previous U.S.-Japan programs to share defense technology, nearly all the flow has been from the United States to Japan. Japanese law bans arms exports and allows export of military technology only to the United States.

The new program, quietly agreed on by the two governments last month, aims at creating a more balanced two-way technology flow by expanding cooperation into Japan’s commercial sector. It also seeks to enhance the ability of U.S. defense manufacturers to keep up with fast-moving technical developments in commercial fields.

The U.S. Defense Department is especially interested in gaining access to cutting-edge Japanese technology in the fields of composite materials for aircraft, ceramics for use in engines, and electronics such as flat-panel displays.

It could prove difficult to find ways to offer Japanese firms enough technology to win their cooperation without drawing criticism in the United States over sharing taxpayer-funded research with Japanese companies. But proponents believe the potential benefits far outweigh any commercial risks.

“We will offer unprecedented access to our military technology in exchange for some key dual-use technology for use in our defense,” Kenneth S. Flamm, deputy assistant secretary of defense, said in an April speech to Japanese corporate executives.

While Washington will also be willing to buy technology, Flamm stressed that the focus is on technology barter deals.

“Your most important participation incentive,” he told members of Keidanren, the Japan Federation of Economic Organizations, “is likely to be access to our defense technologies, because what we are talking about is long-term and unprecedented. We believe that these U.S. military technologies could have important civilian applications in . . . aerospace, space structures, satellites, sensors, software engineering, etc.”

Flamm suggested that the U.S. and Japanese governments would primarily play roles as facilitators for technology swap deals made on a company-to-company basis between U.S. defense contractors and Japanese commercial firms, but that “no one will be forced by anyone to do anything.”

During Flamm’s visit to Tokyo, “we reached an understanding with the Japanese that we will go forward to work on the TFT (Technology for Technology) policy,” said a U.S. embassy official who spoke on condition of anonymity. The agreement is informal but is still a breakthrough, he said. “We have commitments from both MITI (the Ministry of International Trade and Industry) and JDA (the Japan Defense Agency) to earnestly support this initiative.”

Shigeru Hatakeyama, deputy minister of the defense agency, confirmed that “an agreement to expand technical exchange in both directions” had been reached. Talks will now begin on concrete projects, he said.

The driving force behind the initiative is the rapid shrinking of the U.S. defense budget, the U.S. diplomat said, which has forced officials to acquire equipment in the most cost-efficient manner.

Japanese firms, however, may prove unwilling to swap their most advanced technologies for anything less than access to American research with the most valuable commercial application.

“In general, (Japanese companies) show interest because the U.S. must have so much advanced technology,” Kiyoaki Aburaki, staff economist of Keidanren’s defense production committee, said in an interview.

“But they don’t know to what extent the U.S. will open its advanced technology to Japan, and also what kind of technology the Department of Defense wants in return. Everybody knows they want flat-panel displays or composite materials. But there are lots of types of composite materials and flat-panel displays.”

As a business organization, “Keidanren’s position is that U.S.-Japan technology cooperation is very important because of our security relations, and we would like to promote it as much as possible,” Aburaki said.

But the technology in question belongs to individual companies. Firms that until now have dealt purely with civilian products may not want to risk their reputations by getting involved in U.S. military production unless the Japanese government takes steps to make it absolutely clear that everything they are doing is legal and proper, Aburaki said.

“The Japanese public is very sensitive about defense, or arms, the army, navy or air force,” he noted. “In the case of (non-defense) companies . . . I think their initial reaction will be worried. They are worried about how Japanese consumers see their companies, because a bad image of the company is reflected in great loss of profit in the marketplace.”

The U.S. diplomat acknowledged that the initial reaction from Japanese firms, which are concerned about the bottom line, has been cool.

“We understand that,” the diplomat said. “We are willing to trade our leading-edge technologies. . . . Basically, they could get some neat technology without needing to pay for it, and from that they could develop a better widget on their own.”

Questions could arise in the United States about the wisdom of providing U.S. defense technology to Japanese corporations for them to try to commercialize for profit.

The last major defense technology deal the United States made with Japan--co-development of the next-generation FSX jet fighter for Japan’s air force--precipitated protest in Congress in 1989. Critics charged that too much technology was being given to an economic competitor.

The diplomat, responding to this issue, asserted that given the current fast pace of change, advanced technologies retain their cutting-edge character for only a limited time.

Potential savings in defense procurement far outweigh any risk that U.S. technologies will turn Japanese firms into more formidable business competitors at the expense of American firms, he said.